In modern healthcare systems, individuals typically have access to a large number of healthcare payers which vary in their payment coverage for services rendered by medical practices. For example, some individuals may choose Fee-for-Service health insurance plans, whereas other individuals may choose to be covered by Health Maintenance Organizations (HMOs), Point-of-Service plans (POS), or Preferred Provider Organizations (PPOs). The complexities introduced by the large number of healthcare payer options available to patients of a medical practice may result in underpayment for services provided by the medical practice in the absence of an administrative system that can effectively resolve these complexities.
Ensuring that medical practices are properly reimbursed for the services that they provide to patients is an important consideration for the medical practices. Reimbursement is typically initiated by sending one or more claims describing a patient's medical services to a patient's healthcare payer. In turn, the payer remits payment to the medical practice or denies the claim based on the patient's healthcare coverage.
To assist in the processing of claims, some medical practices may contract with a third party which provides a practice management system for facilitating and tracking the status of claims submitted to the multitude of healthcare payers chosen by patients of the medical practice. For example, the practice management system may be a network-based system that enables billing personnel at a medical practice to view the status of claims submitted to a patient's healthcare payer to determine if and when remittance for the claims is received. If remittance is not received, the billing personnel may investigate the situation further to determine a reason for the denial of the claims so that additional steps may be taken to ensure that the claims are paid.
Many medical practices review their financial information in the form of financial statements, which provide a standard framework for summarizing and communicating financial information to outside entities, such as banks, investors, and state and federal tax agencies. To produce financial statements, a medical practice may rely on computerized accounting systems that record and categorize financial transactions that are entered into the accounting system on a daily, monthly, quarterly, or yearly basis. If the medial practice determines that the accounting equation of Assets=Liabilities+Owner's Equity does not balance, the medical practice may not be able to produce financial statements that are able to withstand financial statement audit scrutiny from outside entities such as federal and state tax agencies. In this situation, the medical practice may be said to not be able to “close.”
Some medical practices may allow payers to remit payments for medical services to the third party which provides the practice management system. The third party may process the payments and may forward an electronic copy of the payments to a bank for deposit. In such arrangements, the practice management system may facilitate the preparation of financial statements for medical practices by recording deposit batches of payment information that is sent to banks on behalf of payers. When preparing financial statements, medical practices may use an accounting system or a general ledgers system to manually compare deposit entries in bank statements received from their bank to the recorded deposit batches stored by the practice management system to ensure that the financial statement for the medical practice balances. When the financial statements are prepared monthly, this process is often referred to as “Month-End Close.”